Fair Deal campaigners outline market rent only option

By Michelle Perrett

- Last updated on GMT

Related tags: Market rent-only option, Leasehold estate

Fair Deal for Your Local campaign has outlined how a market only rent option would work
Fair Deal for Your Local campaign has outlined how a market only rent option would work
The Fair Deal for Your Local (FDFYL) campaign has written to Business, Innovation & Skills Secretary Vince Cable to explain why a market rent-only option for pub tenants is not a “complex and radical idea”.

The group of 10 organisations, which includes the Campaign for Real Ale (CAMRA) and Federation of Small Businesses, claims that including the option in a statutory code would not cause the red tape and increased costs that pubcos have predicted.

The letter said: “Even now some ministers, MPs and officials seem to be under the illusion that the market rent-only (MRO) option is a complex and radical idea.

“Put simply, MRO means a tied licensee can choose whether to remain in the same tied agreement, paying extra for tied products and a lower rent to compensate for them or swap on to an agreement under which they simply pay a market rent and acquire products from any source if they consider the tied rent is not fairly reflecting the tied product prices.”

"Trigger events"

The FDFYL said the MRO should be activated at various “trigger events” such as rent reviews, lease renewals and “significant alterations” of the price of tied products and the sale of a pub.

It said in the letter that: “A five-yearly reassessment allows a party, of a mind to abuse the opportunity to manipulate the dominant position afforded to them by the tied agreement and simply increase product prices, to gain on the swings what they lost on the roundabout”

The FDFYL campaign also argued that the option would not create more red tape for pubcos. It said in the letter: “There is no call for unnecessary red tape, in fact a licensee choosing the market rent-only option releases the pub owning company from red tape.

“There is no necessity to alter lease or tenancy agreements.”

Piggy-back

Campaigners say an MRO can ‘piggy-back’ on existing legal mechanisms and all that is needed is a right to the MRO option.

The letter adds: “The tied licensee’s requirement to purchase products from the pub owning company are called ‘Purchasing Obligations’. It is perfectly simple to sever these provisions from the main document leaving the remainder in force.”

Download the full letter below:

FDFYL letter

FDFYL letter.docx 0.03 MB

Related topics: Marketing, Legislation

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